BUYING A CAR IN CHINA
The government began encouraging private car ownership in 1994. Chinese economic policies are designed to nurture domestic automakers and make car ownership accessible to people who half a generation ago thought themselves lucky to afford a bicycle. The Chery QQ, for example, sells for about $4,500. Chinese-made subcompacts sell for about $9,000. One survey found that 96 percent of car owners paid cash for their cars,
A car salesman told the Washington Post, “I can feel it when they come into the shop. The whole family chooses the car together. I can read the eagerness in their faces. They pay attention to every detail of the car. After they take it home, they get up several times every night to see if their cars are okay.”
In 2000, buses, trucks and other commercial vehicles accounted for about three quarters of four-wheel motor vehicle sales because automobiles on the market were too expensive for the majority of Chinese. At that time most cars, SUVs and vans were purchased by work units rather than individuals. Taxicabs alone accounted for one-third of passenger car sales in China.
Large cars have traditionally done well because many of the buyers of cars have been government officials with chauffeurs. They like the comfort and roominess of the big cars and have the money to pay for them. The entrance of individual buyers to the car market is a relatively new phenomena. Their numbers are rising every year and many of them are choosing smaller models. In 2003, 70 percent of the cars bought were private purchases.
China initially restricted auto financing to domestic banks. In 2001, only 19 percent of vehicles were purchased with financing, compared to 70 percent in the United States. The government has encouraged banks to give out loans to boost the automobile industry. In 2003, non-bank institutions were given permission to give out loans. In the mid 2000s, Volkswagen and GM began offering car loans. Soon 30 percent of all car sales are expected to be financed by auto loans.
The annual auto show in Shanghai has become a big deal. It is just as glitzy as the more famous auto shows in the United States and Europe. General Motors used strobe light and hired the entire Shanghai Symphony to introduce its new cars. At the Beijing auto show, models in mini-skirts lean against new red Ferraris and Mercedes rotated on a circular stage. Representatives of second tier Chinese automakers tug on the sleeves of potential buyers like vendors in a busy market.
The is a joke about a peasant who sees a sign for a Volkswagen Santana 2000. He walks into the dealer and offers 2000 yuan ($274) for the car. The dealer tells the peasant that the offer is too low and sends him across the street to dealer with Mercedes 600 on display.
Websites and Sources on Automobiles in China : China Car Forum Automaker List chinacarforums.com ; Wikipedia article on China National Highways Wikipedia ; Map of China’s Highways maps-of-china.net ; Driving and Owning a Car: Expat Blog Report on Driving in China expat-blog.com ; Driving in China Report destoop.com ; Wikitravel Article Wikitravel; Karakoram Highway in China: Wikipedia article Wikipedia Joho the Map John the Map ; Photos Karakorum Highway Blog
Middle Class Desire to Buy a Car in China
Zhongshan taxi Michael Wines wrote in the New York Times: “From one point of view, this can be seen as another milestone in China’s storied economic rise. This year, nearly a third of all Chinese households fit the definition of middle class, with annual incomes of $5,000 to $15,000, and the share will rise to more than 45 percent by 2020, according to Euromonitor International, a business-intelligence firm. Most of them want cars. The government has been obliging. In 2009, in part to combat the global economic collapse, the national government halved the sales tax on the small-engine cars that most first-time buyers choose, and it spent billions on subsidies for rural car purchases and upgrades to new vehicles. [Source: Michael Wines, New York Times, December 22, 2010]
“Fifteen years ago, hardly anyone could afford a car. Today, everyone can,” said Wang Li Mei, secretary general of the China Road Transport Association. “History just evolved in its own way. Each day we’re getting more cars, and each week we’re building more roads.”
Barbara Demick wrote in the Los Angeles Times, “It was only after the Beijing municipal government last month announced regulations to severely limit the number of automobiles in Beijing that Guo Jian, a burly 38-year-old salesman of eyeglass frames, decided that he really did need a car. No matter that he doesn't know how to drive. Guo bicycled over to the motor vehicle bureau to enter a newly instituted lottery for a coveted Beijing license plate. If he succeeds in getting one of the 20,000 plates to be issued this month, he'll plunk down about $30,000 “ that would be in cash, he says with an immodest grin — to buy the Toyota Camry he's been eyeing.” "I've been getting to that stage in life where I want to have a car. I was thinking about it for a couple of years, but I'll admit — when they changed the law, that was what got me to pull the trigger," Guo told the Los Angeles Times. [Source: Barbara Demick, Los Angeles Times, January 28, 2011]
More than ever, Beijingers want their own set of wheels — that would be four wheels, please — and newly imposed restrictions on car ownership have only further whetted their appetites. In one 24-hour period just before the stricter regulations took effect, up to 160,000 cars were sold, many of them to people who didn't have driver's licenses.” "It has become a mania of sorts," said Jia Xinguang, an independent automobile industry analyst based in Beijing. "All Chinese admire the American way of life, and just like Americans, they feel they want their house as well as their own car."
“As a result, new cars clog Beijing streets, many of them cheap, Chinese-made mini-cars that come in eye-catching shades such as magenta, lime green and persimmon. There's even a black-and-white-model called the panda (the big, round headlights suggest China's favorite endangered species) along with a luxurious assortment of new-model BMWs, Mercedeses and Audis.” "Face it, a car is a status symbol. It shows you're important," said Xin Haibo, a sharply dressed young man in angular eyeglasses and a dashing red scarf.
"Living standards are improving all the time so more and more people can afford cars. In the United States, I hear some families have three or four cars. We'll be happy to have one," said a 59-year-old retired electric company employee. He intends to buy his first car — a Buick... Where exactly he'll go with it, Dai doesn't know. Moreover, he acknowledges, traffic is so bad, he can get around more quickly by subway. "Maybe we'll just take a short trip outside the city for the weekend," he said.
Lottery for New Cars in Beijing
Buick LaCrosse Starting in January 2011, Beijing capped it new small passenger vehicle quota at 20,000 a month as part of the city’s effort to tackle its traffic problem. Under the rules only Beijing residents and members of the police and military are allowed to purchase vehicles. Government agencies will not be allowed to buy vehicles for five years.
To buy a new car in Beijing people must first enter a lottery for a new license plate. At the last count in March 2012, about 970,000 Beijing residents had signed up for one of the 20,282 license plates available for the month. The Global Times newspaper put the odds of getting a license plate at 1 in 47.9. Countermeasures taken by Beijingers against these low odds have included enrolling family members to increase their chances; buying a car registered in another city. [Source: Ian Johnson, National Geographic]
Barbara Demick wrote in the Los Angeles Times, “Under pressure to fix the problem, the government is now limiting the number of new license plates in Beijing to 240,000 per year — about one-third of the number of plates issued in 2010 — to be awarded through the lottery system. Only long-term Beijing residents may register cars in the city, and cars with out-of-town plates can't enter, a measure as drastic as if New York banned the bridge-and-tunnel crowd.
Shanghai auctions plates for $10,000 a pop, Other cities have imposed high parking fees to deter driving in the city.
Lottery Accelerates Car Mania in Beijing
Barbara Demick wrote in the Los Angeles Times, “But even well before the new restrictions, the Beijing car craze was moving full speed ahead. The new rules were announced Dec. 23 at a 3 p.m. news conference and took effect at midnight. That left just nine hours for people to stampede to the automobile showrooms.”
A blogger for a popular forum on the Web portal Sohu.com recalls viewing the news conference live online; and by 3:30 p.m. starting to call for advice on how to buy a car. As soon as she got off work, she asked a colleague to drive her to a dealership. At 9:38 p.m., she had the keys to a Peugeot 307 after using her credit card to pay the $19,000 price in full. Even as she left the shop at 10:30 p.m., others were streaming in to buy before the deadline.
Seeing it as their last chance to own a car, some people took desperate measures. At a BMW showroom, according to a report in the Xinmin Weekly, a buyer used a key to scratch a brand-new car and then announced, "No one wants this car anymore, right? Then I'll take it!" In December 2010, a local paper reported that one Beijing auto shopper, in heated competition for a particular car, smashed its windshield and declared: “This car is damaged. Let’s see who wants it now.” After he paid a penalty of $300, the car was his. Elsewhere, competing buyers bid up the price of an Audi sport utility vehicle by about $10,500 before the winner drove away with his prize.
You Zongyun, a Honda dealer, boasted of having "three months of sales in the month of December alone." He said November was almost as strong because "people had heard the rumors, so even before they got confirmation, there was a rush to buy." All in all, reports the authoritative Web site auto.sohu, Beijingers bought 95,100 vehicles in November — a record and a third more than in the previous month. In one week alone, they bought 30,000.
Waiting Months for a New Car in China
Reporting from Guangzhou Keith Bradsher wrote in the New York Times: “Li Bo, a 28-year-old lawyer, was one of three friends who put down deposits of 50,000 renminbi, or $7,500, in May 2010 at a car dealership to each buy a popular model, the Audi Q5, which sells for the equivalent of $72,000, including taxes, in China. Mr. Li and one friend are still waiting for their cars [seven months later]; the other paid an additional 38,000 renminbi, or $5,700, to the dealership and got his Q5 within a week, Mr. Li said.” “We’re very upset,” Mr. Li said. “There are just too many people ordering.” [Source: Keith Bradsher, New York Times, December 29, 2010]
Automakers have been struggling for years to keep up with demand in China, as sales have climbed at a pace never seen in a major auto market.
Car Ownership in China
Chery Fulwin There were 11,500,000 privately owned cars in China in 2007.
Chinese love their cars and the freedom and opportunities they gives them. A website designer told the Washington Post, “I’ve been to Sichuan, Shandong and Jilin Province, and I plan to spend Chinese New Year driving to Yunnan. I really like what the car brings to my life — convenience, freedom, flexibility...I can’t imagine life without it.”
Car ownership was not allowed until 1994. Before then only top government agencies and Communist party officials were allowed to have cars. In 1995, about 250,000 people owned cars in China. In 1998 about 1 million people did. In 1985, only 60 people in Beijing owned private cars. Cars were so rare that one car — a black limousine — was parked in front of the Forbidden City so that newlywed couples could be photographed next to it.
Initially many people bought cars for face, status and to show off. These days many buy them for fun. Owning and driving a car are still big status symbols in China. Commuters proudly drive their vehicles to work from their suburban homes. One Chinese car owner said: "the majority of people in China like cars and dream of having their own." Glossy car magazines such as Auto Fan and Newest Famous Racing Cars dominate some newsstands.
Through the 1990s ownership remained restricted to a wealthy elite. Black Volkswagen Santanas have traditionally been the preferred vehicle of low-level Communist officials, with black Audis and Buicks with tinted windows being the vehicles of choice among high level officials. Only recently have middle class Chinese been able to afford cars. Many middle class people who purchases cars chose buying a car over buying a house.
A cheap Chinese-made car takes up 140 percent of the buyers’ annual income, compared with 30 to 40 percent in the United States. Imported cars are beyond the reach of ven the upper middle class. Taxes and tariffs add about 50 percent to the value of Mercedes and BMWs. Hummers cost about $200,000 in China.
Getting a License Plate and Registering a Car
BYD hybrid van
To own a car in China one needs a license plate. The Shanghai license fee was $7,524 in 2010. To get a license plate in Shanghai one needs to bid in a fiercely competitive auction with secret bids. To sign up for the auction one has to wait in a line that snakes for several city blocks outside of office that gives out the licenses. In 2002, only 2,350 licenses were given out in Shanghai every month. By 2005, around 14,000 were given out every month. People who bid too low have to try again next month. The process was made difficult on purpose: to limit the number of cars on the road.
Describing the scene at the licence plate office, Wang Tung wrote in the Washington Post, “In the final hour of bidding there is a mad rush to get in the door. Participants claw their way inside the auction hall to one or two dozen dilapidated computer terminals where they must enter their registration number, password and bidding number.”
“Within seconds after the door flew open....the chamber was a sweltering mosh pit, thronged by red-faced men and women clutching onionskin registration forms by the fistful. Several scuffles required auction officials to act as referees...The computers were switched off at 3 p.m. The bidding stopped, dealers and customer shuffled out into the lobby to smoke and wait... After a while the officials announced the minimum bid. Those who did over that amount got licences. Those that bid under that amount didn’t get one.”
The government has raised fees for car registration every year, doubling them between 2000 to 2005 to $4,600 per vehicle — more than twice they city’s average per capita income — but still the cars keep coming. Many Shanghaiese get around the registration fees by illegally registering their cars in other cities where the fees are much lower.
The government is reluctant to do too much to slow car ownership out of fear of slowing economic growth and alienating the middle class.
Problems of Car Ownership in China
People who purchases a car generally pay more than 30 percent over the sticker price after they are through paying taxes, fees, maintenance, parking, tolls, gasoline and insurance. For many urban people cabs and bicycles are much more cost efficient and practical forms of transportation. Many car owners still ride their bicycles to work and use their cars on their days off to visit places out of town and to carry heavy items such as rice, coal and flour.
Owning a car in China entails a lot of extra bureaucratic headaches. After purchasing a car in Changsa, for example, motorists have to make 15 trips to five different offices to get all the paperwork done, and pay $550 for taxes and fees, $210 for a year's parking, and somewhere in the neighborhood of $50 a month for gasoline and traffic ticket fines.
Most people who own cars lived in urban areas where traffic is a problem and parking is limited. Most Chinese cities were built for bicycles not automobiles. Unlike American cities, Chinese cities have virtually no parking spaces and no parking garages. Most neighborhood streets and alleys are barely wide enough for one car. Millions of bicycle riders keep motor vehicles moving at a slow pace, and the main thoroughfares generally aren't wide to accommodate normal traffic.
Guangzhou and Cars
With severe restrictions being placed on vehicles in Beijing and Shanghai, Guangzhou in southeastern China has the potential to become the country’s largest single market in 2011. With Toyota, Honda and Nissan all operating joint ventures in the city, Guangzhou has nearly caught up with Shanghai as the largest car manufacturing hub in China. Severe traffic is not yet a crippling problem in Guangzhou. City leaders are leery of discouraging car sales. “At the current time, Guangzhou does not have plans to follow Beijing’s new limit on the issuance of car license plates in 2011,” Chen Haotian, a vice director of the city’s powerful Development and Reform Commission, told the New York Times. “Our city has a very good subway system, which should help to alleviate big traffic jams.” [Source: Keith Bradsher, New York Times, December 29, 2010]
Keith Bradsher wrote in the New York Times: “Guangzhou had severe traffic jams a decade ago, but moved more quickly than Beijing to build a subway network that opens 30 kilometers, or 20 miles, of new lines each year. Traffic flows more smoothly in the city than in Beijing, although Guangzhou still had to impose restrictions on who could drive, based on license plate numbers, during the Asian Games.”
Guangzhou imposed odd-even license plate rules to cut car usage during the Asian Games in 2010 as Beijing did when it hosted the Olympics in 2008. The rules were kept in place after the Asia Games to reduce air pollution.
Image Sources: 1) University of Washington; 2, 9, 10) Beifan.com 3, 5 ) Nolls China website ; ; 4) Mongabey ; 6) CIA; 7) Gary Braasch; 8) Julie Chao ; Liu Bolin, China’s Invisible Man artist, Global Times Chinese: photo.huanqiu.com ' Amazon; Wiki Commons, Asia Obscura
Text Sources: New York Times, Washington Post, Los Angeles Times, Times of London, National Geographic, The New Yorker, Time, Newsweek, Reuters, AP, Lonely Planet Guides, Compton’s Encyclopedia and various books and other publications.
Last updated July 2022